Share purchase against an asset purchase, which one do questions care about
Business chapter spends a long time on this and I cannot tell whether it is background or something I will be asked to apply.
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Best answer
Applied, regularly, and one question unlocks most of it: what happens to the liabilities.
Buy the shares and you have bought the company as it stands, including whatever it owes and whatever it is being sued over. The entity does not change, only who owns it.
Buy the assets and you are choosing what comes across, so debts generally stay behind with the seller. Generally, because some obligations follow anyway, employees being the obvious one.
A pattern that mentions a lawsuit nobody has resolved yet is asking which structure the buyer should want.
the unresolved lawsuit as the signal is useful. mine mentioned one and I ignored it.
Tax pulls the two sides in opposite directions, which is why real deals argue about this. Sellers and buyers each prefer a different structure for reasons that have nothing to do with liability, and a question can be testing that instead.
do we need the actual tax treatment or just that they differ?
That they differ and in which direction. I would not try to carry the mechanics in.
employees carrying across regardless was what I had wrong, and it makes the asset route much less clean than it sounds
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